Originally posted by SASKFARMER
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Last edited by Sheepwheat; Feb 5, 2020, 08:59.
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Originally posted by Sheepwheat View PostAnd even if you own things worth twelve times the ask, you still need income tax proof that you can repay. Even on a little loan. And that was just what I offered. Loan would have been for an amount about .5 % of my equity. No dice.
If you wont share the whole picture don't expect them to feel real comfortable with you.
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JOriginally posted by LEP View PostYou say it was a small loan, .5% of your equity, but you didn't want to show the information on the whole operation. That was the issue. I have done several ventures , some small some bigger. But when I apply for credit it is always backed by the full picture of my operation.
If you wont share the whole picture don't expect them to feel real comfortable with you.
Thankfully I don’t really care. We never needed the loan that badly I just mainly wanted our new company/business to have a credit history on its own, as it comes in quite handy for a lot of reasons. I am not a firm believer in envelope filing, or big pot filing. I want to track each entity and track them accurately and well. I guess I thought they would understand this??? I am 43 now. A proven track record of survival through some awfully lean years. I am certainly not going to ask my relatives to co-sign a loan. Even if this is the general course of action. So we pinched pennies and paid our own way.
Ahh farming!
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Originally posted by helmsdale View PostOwn ZERO acres... Absolutely no way I can even begin to afford going rate around here.
Went to work in the patch right out of university, and started trying to save up to buy a few quarters. 1 opportunity came up in the 5 years I was working. I offered 25% above market on 3/4's and was BTFO by an outside investor.
There have been exactly ZERO other opportunities since then... Some land has traded hands, but it has been sold to long term renters of said land who are rather well healed and there is absolutely ZERO benefit to me long term to get into a bidding war on dirt they were renting.
Since then, land has appreciated somewhere in the neighborhood of 300%. Only avenue available for me to farm was to rent. Those that I've been renting off of, have ZERO desire to sell as they see nowhere for land prices to go but UP, so why not rent in the meantime and let their descendants decide whether to hold the asset or liquidate it.
In hindsight, would you have bought land elsewhere just to have something? Like Jazz mentioned earlier, buy land far away and rent it out.
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Helmsdale, owning at least home quarter is an absolute must if you are an active farmer. The security protection and land owner rights associated with that piece of land are huge and can be conferred to your decendents.
Nobody in Canada can f with your home quarter, not the bank, not the govt, not the protestors, not the natives. And your children can get the same protections if they decide to live there as well.
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I have taken out numerous loans and mortgages and have never had any problems getting them, as I always provided the information the lender required. If I'm not mistaken I'm going to them to borrow money.
I had solid business plans and the collateral right from the beginning which made it a bit easier every time.
I agree with lenders 100% on their borrowing requirements. The rules apply to everyone. I sure as shit don't want them lending out money to some pie in the sky business plan, because in the end lenders do get their money back to make up for bad loans and it comes out of the pockets those who full fill their obligations.
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Sheep with respect, you may have gone about your lending application backwards. Always use an established business to fund a new venture. You wanted to keep your grain biz seperate and expand your other side with a more risky venture. You might be able to sell lamb for $400, but those are iffy local markets. Your grains are being sold into a massive market with basically instant movement and visible pricing. Just like owning stocks, the market cap and liquidity of the sector matters.
I one time asked the bank for a million dollar credit line to put in the stock market. banker was rolling on the floor. Shouldn't have told him what it was for.
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Originally posted by foragefarmer View PostI have taken out numerous loans and mortgages and have never had any problems getting them, as I always provided the information the lender required. If I'm not mistaken I'm going to them to borrow money.
I had solid business plans and the collateral right from the beginning which made it a bit easier every time.
I agree with lenders 100% on their borrowing requirements. The rules apply to everyone. I sure as shit don't want them lending out money to some pie in the sky business plan, because in the end lenders do get their money back to make up for bad loans and it comes out of the pockets those who full fill their obligations.
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Originally posted by jazz View PostHelmsdale, owning at least home quarter is an absolute must if you are an active farmer. The security protection and land owner rights associated with that piece of land are huge and can be conferred to your decendents.
Nobody in Canada can f with your home quarter, not the bank, not the govt, not the protestors, not the natives. And your children can get the same protections if they decide to live there as well.
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Originally posted by Marusko View PostThat's rough. I'd be uncomfortable with rent only operation - I've always seen land ownership as the ultimate goal, providing stability and collateral, and a retirement plan. On retirement, what's your long-term plan?
Only other guys my age around here that are giving it a go, got significant financial help, or at least had family willing to lay paid for equity up as collateral. I'm in neither of those positions.
Long term, I hope my landlord relationships will provide me an opportunity to purchase some land outside my parents, but who knows. Being a landlord is all the rage these days when land values have vaulted by 25-50%/yr over the last decade.
Who knows where things go from here...
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Originally posted by helmsdale View PostLand ownership certainly is the long term goal... I'm about 5 years too young. There were *a few* opportunities while I was in university. School chums that bought then, have made 4-5 times return on their equity. Guys that were 4 or 5 years older than I managed to get a start at a reasonable price out of college/uni.
Only other guys my age around here that are giving it a go, got significant financial help, or at least had family willing to lay paid for equity up as collateral. I'm in neither of those positions.
Long term, I hope my landlord relationships will provide me an opportunity to purchase some land outside my parents, but who knows. Being a landlord is all the rage these days when land values have vaulted by 25-50%/yr over the last decade.
Who knows where things go from here...
Good luck I feel your pain and frustrations.Last edited by Sheepwheat; Feb 5, 2020, 14:26.
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Originally posted by helmsdale View PostLand ownership certainly is the long term goal... I'm about 5 years too young. There were *a few* opportunities while I was in university. School chums that bought then, have made 4-5 times return on their equity. Guys that were 4 or 5 years older than I managed to get a start at a reasonable price out of college/uni.
Only other guys my age around here that are giving it a go, got significant financial help, or at least had family willing to lay paid for equity up as collateral. I'm in neither of those positions.
Long term, I hope my landlord relationships will provide me an opportunity to purchase some land outside my parents, but who knows. Being a landlord is all the rage these days when land values have vaulted by 25-50%/yr over the last decade.
Who knows where things go from here...
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When i started farming had no credit rating, bank would not loan me five cents because i paid cash, even if i had the money, some yelling later gave me the loan witch i paid the next day, they made five bucks, closed my account and havent been back since, mind you since i started farming havent seen cash since but built a mini empire. That rbc never saw a penny of. 1979 wasnt fun either.
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Originally posted by brs View PostOnly part is yes equity is 4 to 5 times more now then it was 4 to 5 years ago but equity still doesnt pay the bills. On paper yeah I would have allot more borrowing power then I did 5 years ago but feel i need to take it slow. Not much fun not being able to sleep at night or always am told dont want to loose what u already have.
I read something the other day that was interesting........
“if your in a room of 10 farmers you better figure out how to be a lower cost producer than at least 8 of them or you won’t make the next 8-10 yearsâ€
Not sure if that will play out but makes one think of high input farming and the very high risk ...
crop prices / net returns no where near keeping up with costs in a lot of areas.
A lot of that has been pointed out in discussions here .
Farming all rented land carries a huge risk with today’s rents , a sharp pencils quickly get erased by Mother Nature.
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Originally posted by AlbertaFarmer5 View PostI'm going to say something unpopular, and it could just as easily apply to my own operation, and many others. On a previous thread I gave this producer credit for starting from scratch, not faulting his management, but maybe the timing and location are the problem.
Perhaps 5 years of weather disasters in a row, may indicate that the previous decent years were the exception, and these 5 years are back to normal.
I'm a couple of hours south of Evansburg, but about as close to the western edge of farmland as they are. So we probably have very similar challenges, low heat units, short growing season, excess water more often than not, grey wooded soil, varied topography, bush, wildlife, if anyone closer to the area knows otherwise, please correct me. I have driven through the area often, and looks like it would be a very challenging area, and I don't think it has been traditionally broadacre crops, likely for good reason. A quick look at google maps looks like when it is wet, it is really wet, lots of bush remaining, or freshly cleared, water runs, low areas and obstacles.
We had a number of years with extended growing seasons, which made a lot of us on the fringes think that was normal, and we get offended at the suggestion that global warming didn't permanently make us the new banana belt.
I don't know how much realistic research the banks use to judge climate/weather risks when lending money to farmers. But just maybe they look at 5 years of disasters, and the historical land use, and the actual climate trends ( not the ones Chuck imagines are occurring), and have established that this is too big of a risk, and with no land for collateral, he would be the first to feel the pinch. If anyone else who owns land wants to risk, or burn their own equity to continue to fight mother nature, the bank will gladly agree.
And that is part of the process of low prices curing low prices. One way or another, the least profitable or most risky acres will come out of production. Every acre looked profitable at the highs. And in a disasterous year like 2012, prices still made up for production problems.
Profitability while not great is still positive. Equipment is still getting fixed (not upgraded), land payments and rent are current, and the family can still get away once in a while. My buddy is still waiting on crop insurance to measure his bins and they told him that 75% of producers in our area are in a claim position (low yield or snowed under crop) which is higher than I expected.
Crop insurance has saved a lot of folks out here over the last few years (us included) and helped with the conversion of grass to cereals and canola due to better coverage. I just got this years pasture insurance renewal and coverage/premiums went up by 50% which I think is great. It closer resembles the value of lost grass during a dry year which is probably overdue for us.
Looking forward to spring here ............. Bring it onðŸ€
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